After studying the forex game for some time I came up with a script and had it coded into a demo account (no money, no spread).
I back tested the script for three months and forward tested it for six months (total of nine months). The demo showed average returns of 1200 pips profit a month. (worst month 900 pips best month 1700).
Problem is, the script is only profitable when when there is a fixed spread of .5 pips or less, which rules out using this with FXCM or any other online broker.
Where can I get access to such low spreads and do they even exist?
You mean that it was not profitable even with a 2 pip spread?
is it a scalping method? because why would like 1 pip make a difference in that if your gaining over 1200 pips a month.
but the only place i have found that has 0 spread is probably a scam because they take 30% of your account when you withdrawal, and thats even if you get your money in the first place.
but good luck
thanks for the quick response. I’m relatively new to forex so I’m not sure what scalping is. the reason the spread has to be low is because the script runs on a one minute time frame and executes between 20 and 100 trades
a day.
As far as why build the script based on false assumptions, I didn’t realize the drawback until after it was built.
so where can one get access to low spreads (.2 or lower)? I know the big banks and hedge funds do but where else? this thing looks promising it would be a shame not to have a pro at least take a look at it.
Did you try running it on a higher timeframes ? I coded an EA for scalping that failed on the 1 minute chart due to the spread, because the price bars are so short on the 1 minute chart. The same EA works perfectly on the 15 and 30 minute charts because the price bars are so much longer.
after reading up on the definition of scalping, you are correct the script is the very definition of scalping. The script includes between 20 and 100 trades a day and a very tight stop loss.
The number of trades per week/month is usually higher than the pips profit so a minimal spread is essential.
Anyway, if anyone has any suggestions as to where to get access to such spreads it would be much appreciated. Thanks again for all of your help
That will be fairly tricky getting 0.5 spread. The only people able to do this at retail level are market makers (as far as I’m aware).
Trouble is, once they see that your trading is consistently profitable, they will no longer offer you the low spreads and they’ll then send each trade straight through to their liquidity providers. So more than likely they will eventually place you on a different server with higher spreads bypassing their dealing desks.
Why not look for a broker which will give you that 0.5 fixed spread but take a commission? Surely, that would work?
finding a commission based broker is obviously the direction that needs to be taken. to be honest, a fixed spread of .5 will just about break even, to maximize profitability this script requires a spread of .1 or less. The next issue will be building an EA to work with the broker’s software which is a whole nother problem.
Does anyone know of any market makers (banks, hedge funds) that solicit scripts from third parties?
I was going to mention in my last post… It would be a good idea to approach a hedge fund and ask them to go in as partners.
Heck, if they have some spare capital, then you could just go full out and open your own brokerage. Buy the MetaTrader software (~$50K), find some institutions to send your trades through (they’ll welcome you onboard) and there u go…
[B]Edit By Pipster: I will no longer be using BabyPips ever again after receiving an infraction for offering to help another member (classed as solicitation).